The International Monetary Fund (IMF) has commenced discussions with Pakistan regarding a prolonged and substantial bailout package under the Extended Fund Facility (EFF). This 24th bailout program is being pursued by Pakistan to navigate its current financial crisis.
Pakistan seeks a financial assistance package of $6 billion to $8 billion, spanning three to four years, to address its economic challenges. The IMF’s team of technical experts arrived in Pakistan on May 10th to initiate negotiations on a new loan program and budgetary arrangements.
In the lead-up to the ongoing talks, Pakistan has grappled with various economic obstacles, including the shortcomings of a tax amnesty program suggested by the IMF. The international lender has since urged Pakistan’s Federal Board of Revenue (FBR) to relinquish discretionary powers in granting tax incentives. Additionally, the IMF has called for amendments to tax laws affecting NGOs, charitable organizations, and taxed pensioners.
Moreover, the IMF has expressed concern over the adverse effects of special tax regimes in Pakistan’s construction sector. The organization advocates for their removal to enhance tax efficiency.
The IMF’s communication director, Julie Kozack, declined to comment on a staff-level agreement during a press briefing, indicating that discussions remain ongoing. She emphasized that a mission team led by Nathan Porter is currently engaged with Pakistani authorities to explore the next phase of their collaboration.
Kozack acknowledged the completion of the IMF Executive Board’s second review of Pakistan’s stand-by arrangement on April 29th, resulting in a disbursement of approximately $1.1 billion. She attributed this development to Pakistan’s strong policy efforts during the standby period, which contributed to the stabilization of its economy.
